Virgin Media has been warned that customers can rightly assume that prices during the minimum term of contracts are fixed after the Advertising Standards Authority upheld complaints about its “misleading” broadband ads.
Customers has complained that they had signed up to the operator’s 12-month broadband contracts only to be told that their monthly charges would be increasing during the minimum term – an increase they beleive hadn’t been made clear to them.
Virgin Media offered two 12-month broadband packages, one for “just £4 a month for six months then £17.50 a month plus Virgin Phone line (£16.99 a month)” and another for “£25 a month for 12 months then £32 a month.”
Defending itself against the complaints, Virgin Media said it might increase prices such as line rental occasionally which would affect the majority of customers, including those who had signed up for a 12 or 18-month contracts. The company said it did not know if, when or by how much a customer’s “core price” might rise at the start of the contract and was therefore unable to advertise potential increases.
Under Ofcom rules introduced early last year, consumers can leave their telephone and Internet provide mid-contract if their bills are increased. Providers must give 30 days’ notice that they are increasing prices and customers must be able to cancel their contracts during this period without incurring a penalty.
But Virgin said the Ofcom guidance did not prevent them from implementing a price rise during the minimum term that had not been fixed at the outset, and simply confirmed that the regulator was likely to treat any such increase as materially detrimental to customers.
The ASA said that although both the contracts in question were variable, consumers would understand that the price of a package was fixed during the minimum term of the contract unless it was otherwise made clear.
It said: “We considered that the monthly price of a contract was likely to be material to consumers when deciding on a telecommunications package, and that they might not choose a particular package if they knew that the monthly cost could increase beyond the amounts stated in the ad, during the minimum term.”
It added: “Because subsequent price rises meant the advertised price claims for the packages did not represent the prices that consumers would pay throughout the minimum term of the contract, across both the promotional and standard periods, and because it was not made clear that the contract was a variable one in which prices could increase, we concluded that the ad was misleading.”
It ruled that the ads must not appear again in their current form and told Virgin Media not to suggest that a price would be fixed for the minimum term of the contract or for a certain period of time if that was not the case.